Pub. 1 2011-2012 Issue 2

8 7. Asset Inventory. How will the board know if items such as school computers are stolen? Waiting to answer that question until 53 computers are missing and the school makes national news, as in one recent case, is the wrong time. Your board should have a policy requiring assets be inventoried and controlled. A simple bar coding system that inven- tories items and requires individuals to sign for them can go a long way in deterring theft. 8. Asset Protection. The board should have a policy requir- ing management to insure all of the school’s assets against hazards such as theft, vandalism, fire, flood, etc. It’s also a good idea to have building security alarms and a key inventory system. Don’t forget website/password controls and URL ownership so that a disgruntled employee or volunteer cannot lock the school out of its own website or take away ownership of the school’s URL. (Yes, as childish as it is, it has happened.) 9. Auditor Selection/ Independence. The board should take the lead in selecting the school’s auditor, and it should take reasonable steps to ensure that the relationship between the school’s management and auditor is independent. For example, an auditing firm that audits the books of a school operated by a management company and also audits the corporate books of the same management company could be reasonably perceived as not being independent of management. 10. ATM Cards. Don’t authorize them. Use a petty cash account with a proper ledger. 11. Procurement Policy. The board should require that decisions to purchase items and services for the school are conducted at arms length. This typically necessitates policies that require soliciting multiple bids, obtain- ing board authorization for purchases greater than a certain amount, and prior disclosures of conflicts of interest (for example, purchasing food services from an individual or company related to someone in management). 12. Enrollment Reporting. Most of your school’s revenues come from its enrollment. This being the case, the board should continuously monitor changes to enrollment from one reporting period to the next (usu- ally monthly). Requiring management to report changes to enrollment, along with trend data showing changes during the same period in previous years, is part of ensuring that the school isn’t over-reporting its enroll- ment (subjecting it to possible charter revocation) or losing families due to a pattern of mistreatment. Because of various lawsuits with which I’m familiar, I’ve also started recommend- ing that monthly enrollment reports be attached to the minutes, just as the financial statements should be attached as supporting documents. In reading the preceding, the question naturally arises, “how can a board possibly remember to moni- tor compliance with all its policies?” Answer: By relying on a Board Annual Calendar (BAC) to drive the formation of its meeting agendas. Using a simple spreadsheet, cre- ate a BAC that has three columns: month, policy to be evaluated, and reference. For example, in August each year, the board may decide to evaluate compliance with its asset protection policy, which, for example purposes only, we’ll reference as policy #8. Other items, such as review of credit card statements, can be noted as monthly. And always remember this key: Compliance is demonstrated through substantiation (documents, etc.), NOT assertion. How can your board use the information in this article to strengthen its financial over- sight? Use it for discussion as an agenda item at your next meeting. Then, introduce a motion to form a board committee for the purpose of evaluating the school’s current financial management practices, followed by recommending policies. And don’t be misled by trust. As the axiom says, it’s a necessary condition for fraud. Dr. Brian L. Carpenter is a prolific author, speaker and board developer whose impact is felt in charter schools throughout the country. Both of his books, Charter School Board University: An Introduction to Effective Charter School Governance and The Seven Outs: Strategic Planning Made Easy for Charter Schools are available on Amazon. com. He can be reached through his website at www.BrianLCarpenter.com. ...continued from page 7